Survey Finds Broker-Dealer and RIA Firms Focused on Hiring in 2011

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An estimated three out of four (75%) of US broker-dealer and independent registered investment advisory (RIA) firms plan to hire up to 30 percent more employees over the next 12 months, according to a new poll conducted by Fidelity Investments.

According to the poll, firm executives reveal that their top staffing priority in 2011 is to recruit new advisors/brokers that have existing books of business followed by those who plan to mentor and help existing staff transition to a broker or advisor role. Interestingly, nearly one-third (32%) of broker-dealers and RIAs say that ongoing industry consolidation has made it easier to recruit, while 62 percent say it has had no impact.

"Growth is top-of-mind for many broker-dealers and RIAs -- something that we heard loud and clear from the hundreds of clients," said Scott W. Dell'Orfano, executive vice president, sales, Fidelity Institutional Wealth Services. "A strong focus on recruitment, especially as a component of a broader client acquisition strategy, is extremely good news for the industry and speaks to an overall confidence for its continued growth and success."

Recruiting Clients and Advisors Are Key Drivers of Growth

According to the Fidelity poll, broker-dealer and RIA firms say that adding new clients will be their No. 1 driver of profitability this year (60%), a 17 percentage point increase over 2010. Firms expect adding new brokers and advisors will be their second biggest driver of profitability at 21 percent, up from 14 percent in 2010. While broker-dealer and RIA firms see client acquisition and broker recruiting as their two biggest drivers of growth in 2011, these are also their top two areas for concern this year.

"There is no doubt money is in motion, whether from investors moving firm relationships or brokers and advisors going independent and bringing client assets with them," said Bobbi Masiello, executive vice president, relationship management, National Financial.

Planning for Succession

The Fidelity poll finds that more than half (53%) of broker-dealer and RIA firms do not have a long-term succession plan for their business in place. Thirty percent state they have an agreed upon succession plan to pass their business on to senior team members, while 15 percent are currently exploring opportunities with a potential merger partner.

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